AOL Canada Inc. officially launched its national voice-over IP service Wednesday with phone service that takes a cue from the traditional telcos but also peer-to-peer players such as Skype.

AOL Canada has offered phone service called

TotalTalk in the Toronto area since December 2004 and has been beta-testing a national service with about 300 users for the last few months. The company, known primarily as an Internet service provider, is now offering the service to about 3,500 communities in Canada, most of them in and around metropolitan areas. The service is primarily aimed at AOL Canada’s Internet users, but is also available to anyone with a broadband connection.

Steven Koles, general manager for Netscape and AOL enhanced services, said that the offering will include local and long distance as well the “stupid phone tricks” associated with traditional phone service like call waiting, call forwarding and caller ID. Like all other VoIP providers, AOL Canada must offer 911 service, as per CRTC regulations. Enhanced 911 has been available to AOL phone subscribers since the initial launch in Toronto, said Koles.

The company will also offer free dialing between AOL Canada customers, regardless of their location. Users across the country are able to talk to one another without incurring long distance charges.

While not strictly a “peer-to-peer” model like Skype, it’s clearly aimed at attracting users that may otherwise have used that service, said IDC Canada Ltd. telecommunications analyst Lawrence Surtees.

AOL Canada will one day be able to broaden that style of service, said Koles, and offer free dialing to AOL users located in the United States. The company is also aiming to establish ties between its Internet and phone service by allowing AOL Instant Messenger (AIM) users to talk to one another. The service isn’t available yet, but the next version of AIM, due later this year, will feature an option to allow a user to dial a person on his “buddy list” without requiring a phone number. All privacy requirements will be satisfied, said Koles, since it’s an opt-in feature.

The VoIP market in Canada is about to receive numerous entrants. All the major telcos and cable companies are planning some form of service (Rogers is due in July) and there are already options available from smaller players like Vonage Canada and Primus Telecommunications.

“At this point, because awareness levels are still relatively low in the marketplace, the more the merrier,” said Koles. “The more of us in the market that are actually advertising the service, educating users and creating awareness, (the more) we’re actually helping each other out.”

Theoretically, the market is big enough to sustain multiple players, said Surtees, but it’s too early to tell how it will be divided.

“People have to have the right business model targeted in the right place at the right time at the right cost,” he said. “But what we’re really talking about is competing for a bigger share of the telecom access pie. Is there enough room for all of these players? There ought to be. The question then becomes, who gets whose lunch eaten?”

AOL Canada offers a basic VoIP plan for $19.99 a month for the first three months and $29.99 a month thereafter. A premium plan in available first for $29.99 then $39.95 after three months.


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